Over the last few years, the major players in the Tobacco industry have experienced a decline in revenue from the sales of the traditional cigarette due to the increasing popularity of e-cigarettes worldwide.
A decrease in their revenue from traditional cigarettes coupled with increased tobacco taxes are forcing them to invest in the Global E-cigarette Market.
E-cigarettes are considered less toxic than traditional cigarettes because they produce vapor instead of smoke. They are considered an effective method of helping smokers quit smoking, though there is no scientifically-grounded evidence for this.
Although e-cigarettes have exploded in popularity worldwide, India has not been so quick to jump on board the e-cig train.
India has roughly 110 million tobacco smokers. Thus far, e-cigarettes have not been able to compete with traditional cigarettes because of lack of awareness and the comparatively high cost of e-cigarette starter kits. The lack of regulations regarding e-cigarettes is also affecting the market.
E-cigarettes are not considered as Nicotine Replacement Therapy (NRT) products because of the lack of significant clinical testing in India. Rather, they are sold as “a healthy alternative to traditional cigarettes”. Many online sites sell e-cigarettes citing their advantages over tobacco products and claim that “no harm” is caused to those who use them.
Recently, tobacco companies have realized that the e-cigarette market in India presents a large addressable market to grow and earn huge profits. The high price of e-cigarette starter kits allows only a small fraction of smokers to switch to e-cigarettes. An e-cigarette costs US$6-US$8 per stick in India. The starter kits of recognized brands are available for US$50-US$80 and above.
This offers a huge opportunity for e-cigarette vendors in India if smokers can be encouraged to switch to e-cigarettes. The e-cig market in India is also witnessing the development of innovative products with additional features, an extensive understanding of customer needs, and imaginative marketing.
As big tobacco companies are primarily interested in e-cigarettes, they are providing accurate information about nicotine use and other health problems associated with smoking tobacco, thereby trying to portray e-cigarettes as suitable alternatives to tobacco products.
While the e-cigarette market in India is still in its infancy, the Tobacco industry is taking an active interest in this new-generation product, and vendors are investing significantly in acquiring small entities and organizing advertising and promotional strategies.
The Cigarette market in India is dominated by four major vendors:
- ITC
- Godfrey Phillips India
- VST Industries
- Golden Tobacco
Big tobacco companies such as BAT, Philip Morris International, and Japan Tobacco have stakes in these leading companies in India. BAT and Philip Morris International have recognized brands of e-cigarettes in the global market. There are several vendors in the e-cigarette market in India, but they lack organized e-cigarette selling strategies.
Few vendors use retail outlets to sell their products while many generate revenue through online sales. Tobacco companies promote their e-cigarette brands through celebrity endorsements. They also try to differentiate their brands from those of the Pharmaceuticals industry.
In addition, the increased demand for e-cigarettes is increasing the market’s lucrativeness and forcing retailers and cigarette sellers to stock e-cigarettes, cartridges, and e-liquids. Online sales constitute the majority of the market share. The entry of leading cigarette manufacturers into the market is expected to increase the number of distribution outlets around the country. This will help increase the revenue of the market during the forecast period.
